Wednesday, June 21, 2017

Oil Prices around $43...what's going on?

Oil prices are falling -- just as the "driving season" kicks off nobody knows what's going on.  Barclays has a novel idea -- America's illegal crack down is causing demand for gasoline to fall.  ICE (the US agency in charge of finding illegal immigrants) is hard at work, with routine stops that find illegal immigrants, they in turn have reduce their travel by car dramatically (its more complicated to stop people boarding a bus -- ICE still needs probable cause...)

In Western states illegals account for a surprisingly large percentage of the total population (between 3-5%).  Some dispute these figures, but then they cannot think of anything else either.  Equally intersting are farms in Iowa facing massive labor shortage -- around 75% of all "pickers" were illegal immigrants -- farms became a massive rally point for ICE to find illegal immigrants, the impact is that Iowa farms are facing a massive labor shortage and no idea how to fill the vacuum.  The labor is hard, but relatively well paid (according to some the average hourly earnings are around $15/18 which is almost $7.00 more than the Iowa minimum wages.  Last year already (yes in the days of Obama) farms were having a hard time with the pickers because of ICE action...it would seem that 2017 will be even worse.

These two facts show that America is very serious about its illegal immigration problem (and yes it is a problem).  Trump has continued Obama's policy but may have move the bar into the even more cruel zone than his predecessor -- again its not clear because its all circumstantial evidence.

Where do oil prices go from here?  I would suggest that they have little downward strength, but I didn't think we would be below $45 this summer -- it speaks of economic malaise when demand for gasoline falls off the chart.



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